Is Tesla Set To Gain From Canada's Decision To Drop Tariffs On Chinese-Made EVs?

Tesla Inc. (NASDAQ:TSLA) is likely to be a major beneficiary of Canada’s decision to eliminate tariffs on Chinese-made electric vehicles (EVs), say experts.

Tesla Gains Edge Amid Smart Strategies

The Elon Musk-led EV maker stands to benefit as it began shipping vehicles from Shanghai to Canada in 2023, driving a 460% surge in Chinese auto imports to Vancouver. After Canada imposed 100% tariffs to counter China's state-backed overcapacity, Tesla shifted Model Y exports to Berlin, though lower-cost Model 3 variants are still largely made in China, reported Reuters.

Moreover, the company already operates 39 stores across Canada, giving it a major advantage, while Chinese competitors like BYD (OTC:BYDDF) and Nio currently have no sales presence in the country.

Even though half of the quota is set aside for vehicles priced under 35,000 CAD ($25,189), a threshold above all Tesla models, the company retains an advantage thanks to its early development of a Canada-specific Model Y, enabling it to quickly adjust to the new market rules.

Canada EV Tariff Shift Sparks Backlash

The decision to drop tariffs on Chinese-made EVs has been met with criticism from Sean Duffy, the U.S. Transportation Secretary. He expressed concerns about the potential negative impact of Chinese EV makers flooding the Canadian automotive sector and stated that Canada might regret the move later.

Under the deal, Canada has removed 100% tariffs on Chinese EVs and will permit up to 49,000 Chinese vehicles to be imported each year at a 6.1% tariff, with the quota potentially increasing to 70,000 within five years.

In China, Tesla has been experiencing a mixed performance, with record deliveries in the third quarter of 2025 followed by lower figures in the fourth quarter amid strong competition. The company’s struggles in the global EV market are also evident in its declining sales in North America due to the expiration of the Federal EV tax credit. However, the Canadian market presents a new opportunity for Tesla to regain its momentum.

Benzinga's Edge Rankings place Tesla in the 69th percentile for quality and the 64th percentile for momentum, reflecting its average performance in both areas. Benzinga’s screener allows you to compare Tesla’s performance with its peers.  

Price Action: Over the past year, Tesla stock climbed 3.17%, as per data from Benzinga Pro. On Friday, the stock edged -0.24% lower to close at $437.52.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.